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Microsoft Makes Millions Renting Campus Space to Vendors
theodp writes "In a move that would do Bill Lumbergh (YouTube homage) proud, Microsoft has been pulling in about $25 million a year through its unusual practice of charging its vendors for occupying office space on its campus while working on Microsoft projects, according to the real estate firm that manages the program. And that's before a planned July 1st rate increase that Microsoft informed vendors of earlier this week, which will boost the 'chargeback' rate for its 'shadow workforce' from $450 per month ($5,400 per year) for every workstation to $510 per month (or $6,120 per year). So, is there a discount if you're moved downstairs into Storage B?"
Would it be news if Microsoft paid vendors $450 less per month than company B? Now, wouldn't it be even less news if vendors took this into account and adjusted their fees upwards by $450? This is just an accounting trick that probably has no real world impact on the vendors.
I've worked in companies where every project was required to pay internal IT dept bills for services rendered, so what?
This is an accounting mechanism that forces projects to account for all costs Bourne by the corporation in support of the project. I suspect internal projects are also billed at an equal amount, but the bills remain internal.
It helps facilities lose the stigma of being a cost to the organization and instead it is funded by the internal groups that consume their resources.
At $450/540 a month, that's a pretty good rate for a piece of real estate, a desk, unmetered power and Internet access... Can I feta desk in MS office space for the same price? I currently rent a small 240 sq ft office for my work and it runs $525 for the space, plus utilities & ISP costs - $540/month all-in in an MS facility sounds good to me.
Ken
OK, so you have a worker occupying workspace, using power, air conditioning, network/wifi, phones, insurance liability...all the trappings of a typical office worker in any typical company anywhere. Except they're not working for Microsoft. So, to recoup these costs, Microsoft charges them rent. And this is a problem...why?
The only thing unusual here is that /. thought this was story-worthy. And $25M is a pittance compared to the company's bottom line so it's not like they're making out like bandits here.
In the end they will lay their freedom at our feet and say to us, Make us your slaves, but feed us. - Fyodor Dostoyevsky
And they'll end up abusing it.
As opposed to paid Microsoft shills and astroturfers posting their lies and modding down anyone who posts the truth about that evil empire?
* Carthago Delenda Est *
Don't know why it is such great news.
I mean, Microsoft is being smart and it seems like what they charge is a pittance and the vendors can probably use this as a tax deductible expense.
After all, vendors are in the business of making money with their products, in this case, Microsoft based products, so, Microsoft gives them a hell of a great deal, and I mean, it seems like a cheap price for them to work on their products, having access to Microsoft themselves. I think it's just smart.
It seems to me that Slashdot (or Dice Holdings) is bothered when Microsoft makes money, whether it be through their products or anything else. And the references to the movie Office Space are off-topic.
When people aren't having to drive to work they aren't putting load on infrastructure (roads, buses etc) at the same time as everyone else. That means they create less pollution than someone that has to drive to work. A person that doesn't contribute to traffic and likewise doesn't make that contribution to pollution is better for the community than the person that does. The greenest commute is the one you don't have to make.
I previously worked for a fortune 25 company that had one third of it's work force telecommute from home. They estimated that the cost of providing office space to tens of thousands of employees were well over a billion dollars a year. They also were able to claim credit for green savings for the environment in different manners (the greenest office building is the one you don't have to build).
They also had the benefit of being able to use the flexibility of telecommuting as a competitive advantage when hiring and retaining employees. They were also better able to monitor the employees that telecommuted than the ones in the office and so they were more productive. Yahoo's problem was strictly one of management failure, not one of telecommuting failure.
The contractors at my company are required to use a company provided laptop, which is rented out. Every month the contractors include that expense in the invoice. It's expected and standard practice.
It's arrogance plain and simple and Microsoft is slowly and steadily becoming less relevant in computing today.
You're absolutely right. Microsoft is so totally irrelevant that last year they only had $68 Billion in revenue and only had the highest profits in the company's history. Yep, you nailed it. Microsoft is failing and failing fast.
Actually, you're sort of on to something, but not necessarily the way you mean it.
As a result of various lawsuits which accused Microsoft (accurately, IMO) of using contractors ("a dash" employees, aka dash-trash, for the a- designation on their email addresses) as a de-facto permanent labor force without the benefits, contractors now have various limitations built into their contract, including, I believe, a 90 day mandatory period between contracts totally a year of employment. (It is worth noting that every time these lawsuits went through, the end result was in the contractors being treated worse.)
Of course, in terms of running projects, having your permatemps disappear is a major pain in the ass, so a lot of companies have gone over to using "vendors" or "v dash" employees - under a different set of legal rules, part of which involves that their parent company is providing a workspace for them - so they "rent" it from microsoft. From what I can tell it allows for a group of slightly better treated permatemps.
(Disclosure: When some of the early restructuring contracting relationships came down in the mid nineties... I took a perm position. But that was back in the day when you could make more money - well, salary - as a temp than a perm employee. And I can't complain about my stock option. I'm long gone from the company, but have a few vendor friends... and even fewer perm employees. Most folks long ago sought greener pastures.)